Syngenta, Corteva Monopoly of Pesticides with Certain Active Ingredients Class Action

This antitrust class action takes aim at certain large, basic makers of pesticides—Syngenta Crop Protection, AG, Syngenta Corporation, Syngenta Crop Protection, LLC, and Corteva, Inc. The complaint alleges they stifled competition by creating loyalty programs that keep distributors from selling lower-priced generic products that contain the same active ingredients and that could save farmers money.

The class for this action is all persons or entities who, between January 1, 2017 and the present, bought pesticides in Mississippi containing the active ingredients azoxystrobin, mesotrione, metolachlor, rimsulfuron, oxamyl, or acetochlor.

Syngenta and Corteva are called “basic” manufacturers because they develop and patent the active ingredients in pesticides. They are then allowed to be the only ones to make the pesticide with the same active ingredient(s) for a period of years. After that period, the
patent expires, and generic pesticide manufacturers can make their own pesticide with the same active ingredient(s). These products are usually cheaper because the generic manufacturers do not have to do the original research, so those who buy them save money.

The loyalty programs work because, according to the complaint, only a small number of distributors dominate the pesticide market, distributing the pesticides to retailers through what is called the traditional channel. The complaint alleges, “Just seven distributors[] account for more than 90% of sales through the traditional channel, and therefore account for approximately 80% or more of all sales of pesticides to farmers in the United States.”

With the loyalty programs, the complaint alleges, Syngenta and Corteva promise to give distributors a “rebate” for the Syngenta and Corteva products they buy—provided they promise to limit their purchases of the generic pesticides to only a certain percentage of their buys from Syngenta or Corteva.

Syngnta and Corteva, the complaint alleges, “both reward participation in their loyalty programs and punish non-compliance. Indeed, [Syngenta and Corteva] ensure that Distributors profit more from accepting [Syngenta’s and Corteva’s] ‘rebates’ payments than they would from distributing a higher volume of lower-priced, generic pesticides.”

With the distributors tied up by these loyalty programs, the complaint alleges, “competing manufacturers cannot effectively sell their pesticides and farmers are forced to purchase [Syngenta’s and Corteva’s higher-priced products. As a result, farmers face decreased innovation, fewer choices, and increased prices totaling many millions of dollars in overcharges.”

The complaint therefore alleges that Syngenta and Corteva have therefore effectively had monopoly power over the market for pesticides with certain of the active ingredients.

On September 29, 2022, the Federal Trade Commission (FTC) has now filed a complaint against Syngenta and Corteva, which the complaint claims “alleg[es] that [Syngenta’s and Corteva’s] loyalty programs foreclose generic competition and result in higher prices for farmers in violation of federal and state antitrust laws.”

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Keeping Generics Off the Market